Change in Magic Ownership and Ops

This letter was sent from Tom Barker to interested parties today about the future of Magic.  If anyone has any insight please share:

At this point I have organized a new company, Magic Mountain Resort LLC, (MMR LLC) to operate Magic Mountain. That role for MMR will commence as soon as a lease is negotiated. There is general agreement on the terms of the lease. There is also an agreement that transfers to MMR LLC certain mountain related equipment, Point of Sale Terminals and similar office equipment and computers, Snowmaking Equipment , Groomers, Mowers and tools to MMR. MMR has not received and does not expect to receive any funds related to the Magic Faithful Club. Revenues from early 2014/15 season pass sales are being spent on the mountain for maintenance and MMR will fully honor those season pass commitments.

Recognize what is the structure of Magic’s management organization. At any time a company holds an operating lease and that operating company is totally responsible for its actions. In succession those companies were businesses that the Thorners and Boston Concessions owned, Old Fashioned Ski Company that Boraski owned, Magic Group that Aichholz owned, JLS Magic that Sullivan owned and now Magic Mountain Resort that I own. Each company was faced with running a mountain that has not generated significantly more revenue than it spent to sell the tickets. The Magic share program and the Magic Faithful Club were efforts by JLS Magic to address the problem and like other efforts by prior companies that program did not pass onto the next company. It seems intuitively safe to say the MFC funds were spent on the mountain. There were major repairs and purchases, i.e. Groomer, Red Chair, Irene silt in the pond, Snowmaking pipe welding, etc., that were paid for while there was no cash generated by the mountain. Where else could the money have come from?

At this point in time we do not have the accounting detail to state just how Mr. Sullivan spent the MFC funds. If MMR LLC finds an auditable explanation of MFC expenditures it will be published to the MFC donors. That is not because MMR LLC is responsible for any of this but because we all want the MFC donors to understand what happened, to not hold MMR LLC responsible and to remain faithful customers. However, if you have a legal complaint against the MFC operation your discussion has to be with Mr. Sullivan. His company JLS Magic still exists and it must respond to legal proceedings, but it has no revenue source from Magic.

Prior operating companies have failed because they could not contain cost to 75% of revenue. I’m facing that same problem. Relative to what will be done going forward, I am forced to make Magic work the old fashioned way, selling more stuff than I have to buy. My focus now and for the foreseeable future will be cost control. Last year Magic’s total revenue was about $950K and its total costs were $950K +/- $2K. That defines a breakeven situation. I will be focused on (1) maintaining or growing the revenue, (2) putting in enough money to carry operations through to winter without borrowing, (3) managing cost to end the year $200 to $300 K in the black and (4) rolling that extra cash back into the mountain on the type projects that were targeted by MFC funds.

As always I’m always available for discussions and I will be posting a manager’s blog to describe what is happening.

Tom

Why is it such a struggle to make Magic Mt a profitable destination?  Not enough vertical, not enough slope side lodging…?  Curious. Thank you,

Dear Friends and Magic Faithful:

For several reasons I have been advised and requested to stay silent relative to the recent changes here at Magic and in relation to the Magic Faithful Club, but I feel compelled to send out this note in response to the many e-mail strings and discussions which have been brought to my attention. Apparently many of you did not receive my e-mail of a few days ago, so I wanted to recapitulate a few of the points and address some of the rumors that we all know can take on a life of their own and tend to get exaggerated each time they are passed from one party to another.

As most of you are aware by now, Tom Barker is establishing and funding a new operating company which will be running the mountain. Tom will be responsible for the finances of the operation and personnel. Based upon the experience I have garnered over the past eight seasons, Tom has requested that I assist him in order to make sure that the mountain operates as smoothly as possible. I have agreed to do so and will be pushing Tom to adhere to the higher standards we have established over the past several years. I am not walking away, and the mountain is not folding. I will likely not have a specific title, but as has been the case since I arrived, I will be doing whatever is necessary to make the mountain work, and sharing my knowledge with Tom will be an integral part of my role. I will also continue to run the racing program which is a personal passion.

Now, with respect to the Magic Faithful Club, I am working with the State of Vermont to come to a resolution. The Securities Commission is looking at the whole process from the initial offering, to the change to a club, and to all of the receipts and disbursements. There undoubtedly will be requirements of me when that process is completed. Club funds have been used, all completely within the four corners of the offering and associated business plan, but obviously without the express consent of the Club. The reasoning behind the use of the funds was simply to keep the mountain open and moving forward, as there were so many demands relative to the lifts and snowmaking. Otherwise, the mountain would have closed. I fully understand that I did not handle the situation correctly and for that I sincerely apologize. Upon the completion of the process with the Securities Division there will be a complete accounting of all funds, and again I will do whatever is required to rectify the situation.

There are other avenues which I could have taken in response to the current issues, but such action would have resulted in closure of the mountain. Most of you have gone to extraordinary lengths to support Magic in my tenure, and I will do everything in my power to honor the commitments you have made by helping to keep the mountain open and moving forward and by addressing and rectifying the situation with the Magic Faithful Club.

Thank you all for taking a moment to read this. I am happy to reply to any inquiries. Have a wonderful Saturday, and I expect that I will see many of you at the fireworks this evening.

Jim Sullivan
Magic Mountain

Peter Minde wrote

Why is it such a struggle to make Magic Mt a profitable destination? Not enough vertical, not enough slope side lodging…? Curious. Thank you,

Smaller than the competition, old infrastructure, inadequate snow-making, lacking in amenities. Sadly, Magic is a ski area whose time came and went in the 70's when I enjoyed skiing there.

Maybe it ain't easy to compete in VT with 150 inches per year?

A google search turned up this:

http://www.tremontsheldon.com/News-And-Results/News/Slippery-Slopes-for-Lawyer-Who-Owns-Ski-Resort-Lawsuits-claim-that-attorney-left-state-after-misleading-clients.shtml

http://www.boston.com/news/local/vermont/articles/2010/02/08/chipping_in_to_save_magic_mountain_a_vermont_classic/

Rut row. Things no lookee so good. Yankee on slippery slope. Need mtn of magic to get out of deep do do.

Confucius say " Yank people's chain. Get bell rung. " .

How are those 3000 dollar T shirts looking now, oh faithful supporters of Magic?

Cool place, as long as the chairs ran, which was an issue over the past two seasons. I guess that's the problem. When a fairly serious skier like myself drives four hours, I want to be assured at least that the chairs are running and there's a little snow up there to ski on. Is that too much to ask? Besides, the total tree skiing areas of Gore or Killington are five times bigger than the fabled knar of Magic. Too bad, As said, it ain't 1970 anymore. You don't even hear Led Zep on the radio much these days.

Harvey wrote

Maybe it ain't easy to compete in VT with 150 inches per year?

A google search turned up this:

http://www.tremontsheldon.com/News-And-Results/News/Slippery-Slopes-for-Lawyer-Who-Owns-Ski-Resort-Lawsuits-claim-that-attorney-left-state-after-misleading-clients.shtml

Old news, which has nothing to do with Magic.

I looked into this years ago (see http://www.epicski.com/t/83004/it-may-take-more-than-magic-to-save-magic-mountain/60#post_1135293) and concluded:

ts01 wrote

I was able to find some public information on the malpractice insurance dispute (between the law firm and its malpractice carrier) and it looks to me like the insurance company decided to pony up after the court in the coverage case allowed pleadings which expose it to bad faith liability for failing to meet obligations to defend the law firm and for ignoring a court order.

So it may be a lot less awful and a lot more complicated than a one-sided story in the local paper suggests. No one has admitted any liability.  Plaintiffs got some money for hitting up a firm which has every incentive to blame it on the guy who left.  Plaintiffs counsel did a little grandstanding to a lazy local reporter who put out just one side of the story; and the other side probably can't be argued due to the settlement, or for insurance reasons.

Lawyers - like doctors, architects, accountants, ski resort operators, and everyone else  -- face liability claims that may or may not have merit and that often get settled for reasons that do not reflect moral worth or  "financial credentials."  One of the big differences though is lawyers attract litigious customers  - duh - who often continue litigating if things don't go perfectly in a process which is adversarial and not likely to satisfy everyone in the first place.

 

Snowballs often sees a conspiracy.

I wasn't trying to imply there was anything crooked going on.  All of the various threads seem to have people implying some kind of nefarious activity but I don't think you are going to find it. IMO the article gives no reason to assume it.

It surely cost money to keep Magic going and it's sounds like Magic doesn't have much.  I can't see how you'd skim and keep the place open. From what I read Sullivan busted his ass for the place.

Harvey wrote

Maybe it ain't easy to compete in VT with 150 inches per year?

The low base elevation is another Magic problem. The 150" might be at the top.
Magic claims a base elevation of 1150 feet (top 2850ft)
Here are some other main base elevations:
Bromley 1950 ft
Stratton 2150 ft
Mt Snow 1900 ft
Okemo 1300 ft
Killington K1/Superstar base 2500 ft
Killington - Snowshed 2200 ft
Ascutney 800 ft

Benny Profane wrote

How are those 3000 dollar T shirts looking now, oh faithful supporters of Magic?

What's your point, other than shitting on strangers on the internet who took a risk to keep something good going?  

Anybody who bought those T shirts should have realized this was one of the possible outcomes.  Whether it came sooner, later, or not at all, could not be known.  

From what I've seen, Jim put money into the mountain - operations or improvements or both - and his explanation seems credible: "Club funds have been used, all completely within the four corners of the offering and associated business plan, but obviously without the express consent of the Club. The reasoning behind the use of the funds was simply to keep the mountain open and moving forward, as there were so many demands relative to the lifts and snowmaking. Otherwise, the mountain would have closed."   He's not disappearing to Tahiti with a suitcase full of cash.  

Benny Profane wrote

Cool place, as long as the chairs ran, which was an issue over the past two seasons. I guess that's the problem. When a fairly serious skier like myself drives four hours, I want to be assured at least that the chairs are running and there's a little snow up there to ski on. Is that too much to ask? Besides, the total tree skiing areas of Gore or Killington are five times bigger than the fabled knar of Magic. Too bad, As said, it ain't 1970 anymore. You don't even hear Led Zep on the radio much these days.

When the chairs don't run, you could earn your turns, or go to Bromley, or Stratton, or Okemo.  Or head up to Viking for a great XC alternative.  Or find some wifi, fire up your laptop, and tell the world whatever else it is that  a "fairly serious skier" would do under the circumstances.

Comparing the "tree skiing areas" of Gore and Killington to Magic is apples and oranges.  Whatever floats your boat.  But the tree skiing at Magic is not in "areas," it is everywhere.  And for better or worse, the crowds at Gore or Killington always seemed five times (or more) bigger than Magic.  

And this has nothing to do with anything, but if you want to hear Zep - http://www.q1043.com/pages/ledzeppelin/ .  8 am and 8 pm daily five days a week, and a full hour on Mondays.

If you're gonna bring Viking XC into the convo, please also include Wild Wings XC in Peru.  Very cool place.

x10003q wrote

Killington K1/Superstar base 2500 ft

Pretty simple. You can't fight mother nature. The place has many faults, but, there's a reason it's popular, and that's one. Best snow within a reasonable drive for millions.

Peter Minde wrote

If you're gonna bring Viking XC into the convo, please also include Wild Wings XC in Peru.  Very cool place.

I'll check it out next time.  How does it compare to Viking?

Harvey wrote

Maybe it ain't easy to compete in VT with 150 inches per year?

A google search turned up this:

http://www.tremontsheldon.com/News-And-Results/News/Slippery-Slopes-for-Lawyer-Who-Owns-Ski-Resort-Lawsuits-claim-that-attorney-left-state-after-misleading-clients.shtml

http://www.boston.com/news/local/vermont/articles/2010/02/08/chipping_in_to_save_magic_mountain_a_vermont_classic/

That is what I was thinking.  It's pretty far south and doesn't get tons of snow which means it has to rely on snowmaking which costs money.  Blow and skiers might come don't blow and they won't for sure.  Catch 22

ts01 wrote

I'll check it out next time.  How does it compare to Viking?

@ ts01, I apologize for my tardy reply.  Hadn't followed the thread closely.

     Wild Wings is classic technique only.  For various reasons - if I ever get a draft to Harv - I got to ski there for an hour this winter. The same weekend I went to Viking.  I was most impressed.  Smaller place with I think ~ 15 km of trails; quite good grooming, very cool vibe.  Not for people who need a glitzy resort.  Friends of mine spent more time there this winter and were most impressed.  I'm gonna make a day to get back up there and ski the whole place out several times.

Peter Minde wrote

@ ts01, I apologize for my tardy reply.  Hadn't followed the thread closely.

     Wild Wings is classic technique only.  For various reasons - if I ever get a draft to Harv - I got to ski there for an hour this winter. The same weekend I went to Viking.  I was most impressed.  Smaller place with I think ~ 15 km of trails; quite good grooming, very cool vibe.  Not for people who need a glitzy resort.  Friends of mine spent more time there this winter and were most impressed.  I'm gonna make a day to get back up there and ski the whole place out several times.

No apologies needed!  Not like I'm about to pack up and hit the snow real soon.

Less glitzy than Viking sounds pretty low-key indeed.  And about my speed; skate skiing looks fun but since classic XC is the only mode of skiing my wife will participate in, classic is just fine.

ts01 wrote

mode of skiing my wife will participate in

YES.

ts01 wrote

  But the tree skiing at Magic is not in "areas," it is everywhere.  

You could make that statement just about everywhere in Vermont if you stay under 2800

all from completely different mtns in vt around 2500

Thanks skimore, made my day!